Zodia Custody Launches Service To Protect Client Assets Against Crypto Exchange Insolvency

December 07, 2022 - Standard Chartered and Northern Trust backed Zodia Custody, a leading crypto asset service provider, has launched a new service to protect client assets against exchange insolvency. Called "Interchange", the service offers an alternative to the pre-funding and margin models on exchanges. Using Interchange, clients can keep their assets with Zodia Custody, while mirroring holdings on exchanges.

Safety of client assets on centralised exchanges has been a hot topic since the demise of FTX last month. As the first FCA-registered bank-backed firm to provide this service, Zodia Custody says that it is committed to helping its clients safely and securely trade cryptocurrencies, while mitigating counterparty risk between participants involved in digital asset trading activities.

The Interchange service provides clients with more flexibility for both Proof of Reserves and multi-exchanges. Zodia Custody’s sister company, Zodia Markets, is also leveraging the offering. Interchange provides transparency and control to exchanges, without ownership of the underlying assets. The technology provides instant access to exchange trading balances and automates post-trade settlement.

Institutions adding digital assets to their strategies continue to face challenges relating to counterparty and credit risk when trading. The market’s lack of security and transparency has since resulted in losses that otherwise could have been avoided. Interchange overcomes this by combining institutional-grade security with the backing of a regulated entity. This includes full segregation of digital assets, ensuring clients are in full command of their investments. Interchange offers a better way to trade digital assets by connecting with regulated, KYC, and AML-compliant venues. This provides flexibility and security for clients, allowing them to take advantage of market opportunities without having to leave funds on exchanges.

Maxime de Guillebon, CEO of Zodia Custody, commented, “Zodia Custody’s key principles have always evolved around asset safety, segregation between custody and trading, and the effective management of counterparty risk.

"The difficulties crypto investors have endured over the last year have exacerbated how critical these principles are today. At Zodia Custody, we believe that such a solution, like Interchange, is not optional, but mandatory.”

Zodia Custody launched in December 2020, a subsidiary of Standard Chartered and in association with Northern Trust, is a crypto asset servicing provider for institutional investors around the globe. Through the combination of leading technology, custody, governance and compliance, Zodia Custody satisfies the complex needs of institutional investors.

The company is AMLD5 compliant and applies the same standards as Standard Chartered relating to AML, FCC, and KYC. It is also FATF Travel Rule-compliant.

Zodia Custody Limited is registered with the FCA as a crypto asset business under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.